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The Millenium Muddle

How to put the years where they belong.

THE YEAR 2000 PROBLEM (Y2K)—where computers
cant determine in what century to place years stored in
two-digit format—is coming to a head. When the clock turns
to January 1, 2000, two years from now, some computers will
spew out erroneous information.

THE ODDS OF FINDING a quick, easy solution today are no
better than the likelihood that the year 2000 will never
come.

NO ONE IS REALLY sure how much the fix will cost. The
Office of Management and Budget estimates the federal
government itself will spend $3.8 billion. Commercial banks
forecast their price tag at $9.3 billion and the Gartner
Group, a think tank, upped that estimate and reported a
worse-case worldwide cost of $600 billion.

Y2K AFFECTS NOT ONLY LARGE computers and their software
but its also poised to foul up personal computers and any
software application programmed with a two-digit year field
rather than a four-digit field.

ACCOUNTING APPLICATIONS are probably the most severely
affected and also the hardest to bring into compliance.
Thats because accounting systems depend on many
date-sensitive operations. Most accounting software vendors
have been striving to make their applications Y2K-compliant.

THERE IS YET ANOTHER dimension to the problem: Older
computers contain a special hardware chip, called a BIOS,
which, among its many other functions, tells the computer
what time, day, month and year it is. Since those chips are
hardwired (a built-in program), they cant be reprogrammed,
and many of them are not prepared to recognize dates beyond
December 31, 1999.

THE TWO MAJOR SPREADSHEET programs—Microsoft Excel and
Lotus 1-2-3—are capable of calculating dates beyond December
31, 1999. But for them to do it correctly, users have to
understand how each application does it.

FOR SOME, a more serious concern exists: The likelihood of
a wave of lawsuits as those hurt by the millennium change
seek deep pockets to compensate them for their losses.

Stanley Zarowin is a senior
editor on the Journal . Mr. Zarowin is an employee of
the American Institute of CPAs and his views, as expressed in
this article, do not necessarily reflect the views of the AICPA.
Official positions are determined through certain specific
committee procedures, due procedures and deliberation.

Early in the 1970s, mainframe computers at many banks,
securities firms and insurance companies began to generate unexpected
errors when they calculated information involving dates that spanned
the period before and after December 31, 1999. Both the managers and
the data-entry clerks were baffled by the errors; not so the computer
programmers. They knew what caused the problem, and they also knew it
would grow more serious as the year 2000 approached. Because the years
had been recorded in the computers memory as two digits instead of
four—97, for example, instead of 1997—as we moved closer to the year
2000, the computers would have increasing difficulty determining in
which century to place a two-digit year designation.

But for the most part those who understood the problem kept silent.
After all, they figured, why worry management now? They were sure that
somehow, someone, somewhere would find a way to solve the problem
before the clock tolled midnight on December 31, 1999.

They were wrong.

As it turned out, the odds of finding a quick, easy solution today
are no better than the likelihood that the year 2000 will never come.
In fact, many of those who now labor over the problem wish that the
year 2000 would never come—or at least not quite so soon. As 1997 ends
and with only two years before 2000, its become clear that, while
surely fixes are available, in many cases they are not going to be
easy, fast or cheap—and, in some cases, they probably wont resolve the
issue entirely.

UNTANGLING THE PUZZLE The problem goes by the shorthand name Y2K (for "year two
thousand"); however, an increasing number of those struggling to
untangle the puzzle describe it in language that cant be repeated
here. As it turns out, Y2K affects not only large computers and their
software; its poised to foul up personal computers (PCs) and any
software application programmed with a two-digit year field rather
than a four-digit field. And that includes accounting software,
computer operating systems, programs that run VCRs, time-controlled
vaults and hundreds, if not thousands, of other date-dependent
electronic equipment.

Whats behind the problem?

In the early days of computers, when hard-disk memory storage was
expensive, programmers were cautioned to conserve memory space. So,
instead of creating a four-space field in an application program where
a year was to be inserted, they economized with just two—after all,
they figured, 2000 was in the next century. Two digits may sound like
an insignificant savings, but when you consider that two digits were
being saved in hundreds of millions of data fields, the savings
actually added up to a significant sum. Although, in retrospect, the
savings may not be as significant as the expected cost now of
inserting those two blank spaces in both application software and the
billions of data fields.

However, not everyone agrees that economizing then was wrong. Two
professors writing in a recent issue of the Journal of Systems
Management calculated that, over the 30-year period when two-digit
economy was designated, a typical organization saved over $1 million
per gigabyte of total data storage. And, they added, if that savings
had been invested wisely during the period, it could have produced a
fifteenfold return—more than enough, they speculate, to pay for the
remedy today.

That reasoning, however, doesnt satisfy many enterprises facing the
daunting task of fixing their software.

THE ULTIMATE PRICE In reality, no one is really sure how much the fix will cost.
The Office of Management and Budget estimates the federal government
itself will spend $3.8 billion. Commercial banks forecast their price
tag at $9.3 billion. J. P. Morgan, the investment bank, came up with a
worldwide estimate of $200 billion and the Gartner Group, a think tank
that does computer consulting, upped that estimate and reported a
worse-case worldwide cost of $600 billion.

While the mechanical cost of the fix is not known for sure, what is
known is that its going to cost more than just a massive software and
database fix. Its more than likely that multimillion-dollar lawsuits
will be filed by shareholders and others who either will be injured by
the problem or will maintain that a companys management, or its
accounting firm or other consultants, failed to take effective and
timely action. For more on the legal and professional impact the Y2K
program will have on CPAs, see the article "Risks
and Liabilities" .

Complicating the solution is the fact that much of the two-digit
software was written in a computer language thats no longer
popular—COBOL—and, as luck has it, there arent many experienced COBOL
engineers around. However, considering the sudden demand for such
specialists, you can bet that loads of programmers are cracking open
how-to COBOL textbooks. One such book, Teach Yourself COBOL in 21
Days, by Mo Budlong, has been selling at the rate of 2,000 a month.
And you can bet that those elite COBOL programmers are charging fat
premiums to do the emergency fix-ups.

Further complicating the problem is that most of the COBOL code
written for old mainframes was not well documented, which means the
only way to locate the errant code for the two-digit-year fields is to
laboriously go through every single line of code for the application
and then sift through the even more numerous data fields themselves.
For a typical application, that could mean several million lines of
code and many more millions of data fields.

And as if thats not enough, many of those old COBOL applications,
which were written for the big mainframes, were updated to operate on
midsize computers and even on personal computers—which simply spread
the two-digit "infection" to other, more popular
applications.

... As If Thats Not Enough

The coming of the year 2000 raises
another, more mundane problem. No one is certain how to
pronounce it. Is it twenty hundred or two
thousand ?

And, while we keep speaking of the new millennium,
technically the new millennium doesnt begin until January 1,
2001. January 1, 2000, actually is still in the 20th century.

But tell that to your computer.

BIOS WOES
There is yet another dimension to the problem that has nothing to do
with application software and the number of digits. Older computers
contain a special hardware chip, called a BIOS, which, among its many
other functions, tells the computer what time, day, month and year it
is. Since those chips are hardwired (a built-in program), they cant be
reprogrammed, and many of them are not prepared to recognize dates
beyond December 31, 1999. So on January 1, 2000, the BIOS chips in many
computers will read the year as 00 and will conclude the date is January
1, 1900. Others, because of a slightly different design by its
manufacturer, will default to the year 1980 and still others to 1984.
The only way to get the right date is to remove the chip and replace it
with a new, correctly programmed one.

Most newer computers have
whats called a flash memory chip that serves the same purpose;
luckily, that chip can be reprogrammed to be Y2K-compliant, and
vendors are supplying updates to do that.

Thats the good news; the bad news is that, so far at least, there is
some doubt whether all the new chips will totally solve the problem.
Even after youve reprogrammed or manually changed the BIOS internal
clock to January 1, 2000 (for details on how to make the change, check
the instructions that come with your PC or call the vendor), and your
screen date actually reads January 1, 2000, theres no guarantee your
applications will accept the new date. As a test, after youve changed
your PCs setup data, run some date-sensitive applications with test
information and see how it will deal with the new date; you may find
the data is calculated correctly or you may discover that some files
get saved to one of those odd default dates: 1990, 1980 and 1984.

Quicken 3, for example, has problems with the year 2000 even after a
computers internal setup has been changed to January 1, 2000. When you
input transactions for the next century, it sometimes reverts back to
1900. A fix is in the works and may be ready by the time you read
this.

Commercial software is available to confirm that a BIOS change is
effective; check your local software retailer for such products. Also,
free software (called freeware) is available to help run tests. To get
such software, search for the following programs on the Internet (key
word: freeware): DOSCHK, 2000Test, 2000Fix and Year2000.

Now for the really bad news. After youve done everything you
can to make your computer systems Y2K-compliant, you will likely run
into at least one more minefield if you regularly import data from the
outside world and its year-designation information is in the two-digit
format. If the year designations in your data have only two digits,
and your application and database have been updated to four fields,
your computer will have to decide in which century to locate the data,
and without some help, its likely to decide incorrectly much of the
time.

In the following article—"Can Your Software Make It Into the
Next Century?"—that problem is addressed with whats called the
two-digit windowing or the pivot solution. As that article explains,
there are multiple ways to address the Y2K problem: Some are
relatively easy and some are relatively hard. But, alas, none are
foolproof.

But as one wag recently said, "I dont know why everyone is
hurrying to solve the Year 2000 problem. December 31, 1999, falls on a
Friday, so theyll have the whole weekend to work out a solution."
n

AICPA Has Help at Hand for the
Y2K Issue

The American Institute
of CPAs published a new book that further explains concerns
involving the Y2K issue as well as a video on the same
subject.

Solving the Year 2000 Dilemma , by Sandi Smith, CPA,
features case studies and offers CPAs timely information on
the Y2K issue in plain English. The book addresses where the
problem exists and how to recognize it and offers readers
possible solutions. It also gives insights into the
corresponding accounting, legal, insurance and business issues
involved. The book costs $29; pricing is slightly higher for
nonmembers. The product number is 093008JA.

The video, Y2K: The Year 2000 Crisis, is 8 minutes long and
calls attention to the Year 2000 issue and the impact it will
have on the accounting profession. The video is free; however,
there is a $7.25 shipping and handling charge. The product
number is 889565JA.

Call the AICPA order department at 800-862-4272 to order
either of the above.

Also, a detailed publication, The Year 2000 Issue: Current
Accounting and Auditing Guidance, developed by a task force of
practitioners and the AICPA technical services staff, is
available on the AICPA Web site— http://www.aicpa.org/members/y2000/index.htm
.

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